Chapter 11: Contract Nature and Terminology Flashcards
T or F: By supplying procedures for enforcing private agreements, contract law provides an essential condition for the existence of a market economy.
True
T or F: A promisee has the right to expect or demand that something will or will not happen in the future.
True
T or F: Under the objective theory of contracts, a contract is not enforceable without a clearly defined objective.
False
T or F: One of the requirements of a valid contract is an adequate market for the deal’s goods or services.
False
T or F: The term consideration refers to the deference shown by contracting parties to each other.
False
T or F: Any contract that is not in writing is not enforceable.
False
T or F: Once an offer is made, the offeror cannot revoke it.
False
T or F: An executed contract is one that has been fully performed by both parties to it.
True
T or F: If what is written in a contract is clear, a court will enforce the contract according to its obvious terms.
True
Mel agrees to work as a freight broker for National Shipping Inc. In determining whether a contract has been formed, an element of prime importance is the parties’:
a. intent
b. objectives
c. subjective beliefs
d. motivations
a. intent
Macy offers to sell his fitness watch for $50 to Nona. Nona promises to pay Macy the price. Later, they exchange the watch for the funds. A contract was created when:
a. Macy offered to sell the watch
b. Nona paid for the watch
c. Macy delivered the watch
d. Nona promised to pay for the watch
d. Nona promised to pay for the watch
Fay offers to pay Grey $50 for a tennis lesson for Hetty. They agree to meet the day after tomorrow to exchange the cash for the lesson. These parties have:
a. no contract.
b. a bilateral contract.
c. a unilateral contract.
d. a third-party contract.
b. a bilateral contract
On behalf of the jazz group Fusion, their manager Gabe agrees to a performance in Hilltop Amphitheatre on July 4. Gabe and Hilltop sign a written copy of the agreement. These parties have:
a. an implied contract
b. no contract
c. an express contract
d. quasi contract
c. an express contract
Vicky asks Walt, a cobbler, to repair a pair of boots. There is no discussion of a price, and Vicky and Walt do not sign any documents. After the repair, Walt hands Vicky a bill. With respect to Vicky’s obligation to pay the bill, this is:
a. an implied contract
b. a quasi contract
c. no contract
d. an express contract
a. an implied contract
Flo tells Ginger during a phone call that she will buy her textbook from last semester for $65. Ginger agrees. These parties have:
a. an express contract
b. a quasi contract
c. no contract
d. an implied contract
a. an express contract
Rough Water LLC and Schafer enter into a contract for the delivery of a certain number of river rafts. Until the rafts are delivered and paid for, the parties have:
a. an executed contract.
b. no contract.
c. a quasi contract.
d. an executory contract.
d. an executory contract
Jana, a nurse practitioner, renders aid to Kurtz, who is injured and unconscious. Jana can recover the cost of the aid from Kurtz:
a. on a quasi contract theory.
b. under no circumstances.
c. only if Kurtz recovers because of the aid.
d. only if Kurtz was aware of the aid.
a. on a quasi contract theory
Sy enters into a contract with Truck Company to work as a driver. If a dispute arises over the deal, under the plain meaning rule, the court cannot consider any evidence not contained in the document if:
a. a contract term can be interpreted in more than one way.
b. the contract lacks a provision on a disputed issue.
c. the words in the contract appear clear.
d. the parties’ intent cannot be determined from the contract’s language.
c. the words in the contract appear clear.
Sui enters into a contract with Trey to act as a personal sports trainer. If a dispute later arises over the parties’ promises, the court will interpret the contract according to:
a. what the parties now agree they intended.
b. the parties’ intent at the time they entered into the contract.
c. what the promisor claims was the parties’ intent.
d. what the promisee claims was the parties’ intent.
b. the parties’ intent at the time they entered into the contract.
The ________ ________ governs all contracts except when it has been modified or replaced by _________ law, such as the Uniform Commercial Code (UCC), or by administrative agency regulations.
common law; statutory
T or F: No aspect of modern life is entirely free of contractual relationships.
True
Contract law is designed to provide ______ and ____________, as well as certainty, for both buyers and sellers in the marketplace.
stability and predictability
an agreement that can be enforced in court; formed by two or more parties, each of whom agrees to perform or to refrain from performing some act now or in the future.
contract
Contract disputes usually arise when there is a promise of ________ ___________.
future importance
In determining whether a contract has been formed, the element of ________ is of prime importance.
intent
In contract law, the element of intent is determined by the __________ ________ _____ ___________, not by the personal or subjective intent, or belief, of a party.
objective theory of contracts
a theory under which the intent to form a contract will be judged by outward, objective facts as interpreted by a reasonable person, rather than by the party’s own secret, subjective intentions.
objective theory of contracts
The four requirements that must be met before a valid contract exists are:
- Agreement
- Consideration
- Contractual capacity
- Legality
Even if all four of the valid contract requirements are met, a contract may be unenforceable if the following two requirements are not met:
- Voluntary consent
- Form (The contract must be in whatever form the law requires. Some contracts must be in writing to be enforceable.)
if the offeree can accept simply by promising to perform; no performance, such as payment of funds or delivery of goods, need to take place for this type of contract to be formed.
bilateral contract
when does a bilateral contract come into existence?
the moment the promises are exchanged
if the offeree can accept only by completing the contract performance.
unilateral contract
When does a unilateral contract come into existence?
the moment when the contract is performed.
a contract that by law requires a specific form, such as being executed under seal, to be valid.
formal contract
What are two examples of formal contracts?
- Negotiable instruments (checks, drafts, bills of exchange, etc.)
- Letters of credit
agreements to pay contingent on the purchaser’s receipt of invoices and bills of lading (documents evidencing receipt of, and title to, goods shipped).
letters of credit
a contract that doesn’t require a specified form or formality in order to be valid.
informal contracts (or simple contracts)
a contract in which the terms of the agreement are fully and explicitly stated in words, oral or written. (ex: a signed lease for an apartment or a house)
express contract
a contract formed in whole or in part from the conduct of the parties (as opposed to an express contract)
implied contract
What type of contract are these the requirements for?
1. The plaintiff furnished some service or property.
2. The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected.
3. The defendant had a chance to reject the services or property and did not.
implied contract
a contract that has been completely performed by both sides.
executed contract
a contract that has not yet been fully performed.
executory contract
a valid contract that may be legally avoided (canceled) at the option of one of the parties.
voidable contracts
a valid contract rendered unenforceable by some statute or law.
unenforceable contracts
a contract having no legal force or binding effect.
void contracts
a fictional contract imposed on parties by a court in the interests of fairness and justice; usually, these contracts are imposed to avoid the unjust enrichment of one party at the expense of another.
quasi contracts
when a contract’s writing is clear and unequivocal, a court will enforce it according to its obvious terms. The meaning of the terms must be determined from the face of the instrument (from the written document alone). The words– and their plain, ordinary meaning– determine the intent of the parties at the time that they entered into the contract.
the plain meaning rule
a court will consider a contract to be ___________ in the following situations:
When the intent of the parties cannot be determined from the contract’s language.
When the contract lacks a provision on a disputed term.
When a term is susceptible to more than one interpretation.
When there is uncertainty about a provision.
ambiguous
The court may consider _______ evidence when a term is ambiguous.
extrinsic
